Channels: trading rules


  • Always trade in the direction of the channel.  In a downtrend use the upper line to initiate short positions.  In an uptrend use the lower line to initiate long positions

  • More aggressive traders might initiate countertrend positions by buying near the lower line in a downtrend and selling near the upper line in an uptrend

  • To identify tops and bottoms use a momentum indicator such as the RSI

 

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